European chip shares continue to fall; TSMC’s record results are not enough
The Taiwanese giant has provided third-quarter guidance that beat expectations, with revenue up 34 per cent year-on-year
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(Il Sole 24 Ore Radiocor) - Another session of selling is on the cards for European chips. Stmicroelectronics, after changing direction several times during the session, has turned downwards. The sell-off is part of the broader corrective movement that has been affecting the semiconductor sector since yesterday, despite the better-than-expected results published yesterday by the Dutch company ASML, the world leader in chip manufacturing equipment, and this morning by Taiwanese firm TSMC (which closed up 1.23 per cent), the leading contract manufacturer of advanced semiconductors for groups such as Nvidia, AMD, Apple and Broadcom, which published record quarterly results. Among other European stocks in the sector, Infineon Technologies in Frankfurt.
In the second quarter , TSMC reported revenue of $40.2 billion, up 34 per cent year-on-year, with an operating margin (EBIT margin) rising to 60.3% from 57.5% and earnings per share of $27.25, exceeding market expectations, which stood at around $24.
The group also provided better-than-expected guidance for the third quarter, indicating revenue growth of 12 per cent compared with the previous quarter and 36 per cent year-on-year, with an expected operating margin of between 56 per cent and 58 per cent. During the conference call, management also revised its capital expenditure (capex) plan upwards, bringing it to a range of between 60 and 64 billion dollars, compared with the previous estimate of 52–56 billion.
“The outlook for operational momentum remains very positive for the semiconductor sector involved in artificial intelligence”, commented analysts at Equita, noting that TSMC is the main customer of Technoprobe and accounts for, between direct and indirect turnover, over two-thirds of the Italian group’s revenue.
Meanwhile, Banca Akros has confirmed its ‘Buy’ recommendation on the share, maintaining the target price at 40 euros, despite the company announcing yesterday the resignation of director Chih-Kuang Yang. “The news could be seen as negative, given that Yang headed the company’s Research and Development division,” the analysts noted, although they did not alter their assessment.
